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Ford and Volkswagen to Form Global Alliance

After months of rumours, the global alliance between automaker behemoths Ford and VW are official [1].

Amid flatlining profits, layoffs and plant closures for Ford, and a struggle for establishment among emerging key technologies for Volkswagen an alliance to stay relevant and competitive was all but inevitable among the two actors, even by Ford’s own words [2]. The partnership will be managed by a joint committee between the companies, with neither party taking any ownership over the other. Initial plans for the alliance are to launch new models of vans and pickup trucks in 2022 and to focus on EVs, AVs and mobility services in the following future.

The companies seem like a good fit for each other across several aspects. For one, Ford has a substantial market share in the U.S., while Volkswagen owns big shares of the European and Chinese markets, where Ford is coincidentally conceding following their recent troubles. Furthermore, VW has placed a huge bet on EV models in the future while falling behind in AV tech and mobility services, two areas where Ford have made sizeable investments.

Two key areas for the future success of this alliance, and subsequently Ford and VW as major automotive actors are EV proliferation in the Chinese market, and market launch of AV services in the U.S. market.

 

Personal comments

Seeing as each actor in this emerging alliance has their strength and weaknesses, it makes sense to team up in the turbulent change that is the current state of the automotive industry. Rumours during the last year also give the impression that these are two actors who have failed to keep up with new trends and look to each other as a sort of last resort as well. Their future and the future of this alliance seems to hinge on how well they can leverage the areas where they actually have significant resources to use in a bid to help each other where they have been left behind.

 

Written by Darijan Jelica, RISE Viktoria.

 

Sources

1. 2019-01-15. Ford and Volkswagen form global alliance, will start by building trucks and vans.

2. 2018-11-18. Why Ford and Volkswagen will get together – but not get married.